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Barclays: Is the balance right between pay and dividends?

Robert Peston | 08:51 UK time, Tuesday, 15 February 2011

Barclays says its headline profits are up 32% to £6.1bn and its underlying profits are 11% higher at £5.5bn.

Barclays bank sign

 

But these figures are calculated on the basis that a business that it sold in 2009, the large investment management operation BGI, had never existed.

So some will argue that progress is in fact less strong - because in 2009 it reported headline profits before tax of £11.6bn, including the £6.3bn gain from the sale of BGI, and it trumpeted underlying profits of £5.6bn.

Although it is par for the course to strip out the surplus from disposals such as the BGI sale in assessing performance, it is curious that the £5.6bn figure for 2009 that it highlighted back then as capturing an essential truth about progress at the bank features nowhere this year.

That said, there is evidence of goodish recovery in 2010 at its retail bank in the UK, where profits were 39% higher at £989m, thanks largely to a sharp fall in the charge for bad debts.

The other highlight is Barclays Capital, where headline profits rose 94%, including the spurious impact of revaluing its own debt. On an underlying basis, pre-tax profit rose 2% to 4.4bn.

So what about the contentious issue of pay for Barclays Capital's 24,800 investment bankers?

Well Barclays says that the bonus pool is down from £2.9bn to £2.6bn (although again I am a bit confused by the 2009 number, because a year ago it told me that its bonus pool was £2.7bn, not £2.9bn).

In that sense, Barclays seems to have honoured its commitment to the Treasury in Project Merlin that it would reduce the total paid out in bonuses. And an apparently relieved Treasury put out the following statement:

"What is clear is that bonuses are down, and are lower as a result of Merlin, and that the banks are paying more tax this year than last year, due in part to the extra £800m bank levy announced last week."

However salaries at investment banks have been increased by around 40% over the past year. As a result pay, pensions and bonuses per head at Barclays Capital have risen 20% to £236,000 on average - which doesn't look too mean, at a time when most British people are suffering real cuts in their earnings as a result of inflation and low pay rises.

Barclays is paying a 2.5p final dividend, giving 5.5p for the year - which compares with 34p in 2007, the last of the boom years.

That massive drop in dividends explains why some big investment institutions are beginning to query whether Barclays and other banks have achieved the right balance between the rewards that go to staff and the rewards that go to shareholders (to be explicit, they would like more to go to them, and less to the bankers - although it is not clear what they will do to bring this about).

As for the other sensitive issue of how much credit Barclays is lending, its UK retail bank increased its loans and advances to customers by £12.6bn to £115.6bn - which will probably turn out to be one of the stronger lending performances reported by British banks.

But Barclays Corporate, which deals with middling size businesses, shrank its loans and advances by £5bn to £65.7bn.

Update 11:05: Barclays insists that salaries plus bonuses of its investment bankers at Barclays capital - what it calls their "comp" or compensation - is down. This certainly looks odd in view of their publised figures - which show that the average ratio of compensation to income rose from 33% to 43%, on average income per head that increased from £515,000 to £548,000.

Now that implies compensation of Barclays Capital's people rose from £170,000 to £236,000.

Now in my earlier note I gave a figure of £196,000 for 2009 comp per head, because that is what last year's release implied.

Anyway on the basis of published numbers, comp per head at Barcap rose either by 20% (what I said earlier) or by 39%.

Both of which look pretty impressive, at a time when the real incomes of most British people are being eroded by low wage rises and higher inflation.

Barclays claims however that its published numbers are misleading on this issue - which is a bit of a turn up, some might say.

So why is the reality for Barcap's investment bankers different from the published numbers? How is it that the implied increase in their pay is wrong?

Here is what a Barclays spokesman says:

"It includes prior year deferrals, changes in pension costs, the full-year effect of last year's salary increases which came through part way througt the year, a build out of Barcap, and a shift in business mix."

So now you know.

Comments

Page 1 of 2

  • Comment number 1.

    Solid set of results: good for Barclays stakeholders, great for the wider nation. Well done Bob!

  • Comment number 2.

    The puzzle for me is why there is not a shareholders revolt about the remuneration v. dividend in the context of a mediocre performance. You can be sure that in the average there have been some very large increases in gross pay resulting from a modest reduction in bonus but an inflation beating (even if CPI is 4%) rise in basic salary. One dimension not mentioned is to what extent has this bank fleeced its customers particularly the SME's who can obtain funds, but under onerous conditions and rates that bear little relationship to the wholesale cost of finance.
    Of course the inescapable conclusion from the extraordinary and fabulous levels of remuneration is the lack of real competition in this industry but which could be partly remedied if the government exercised more control over the nationalised banks.

  • Comment number 3.

    1. At 09:17am on 15th Feb 2011, kalokagathia wrote:
    "Solid set of results: good for Barclays stakeholders, great for the wider nation. Well done Bob!"

    These are 2010 results and John Varley was still CEO so he deserves the credit for the results.

  • Comment number 4.

    So - "average pay etc" at Barclays Capital is now at least 25 times the National Minimum Wage.

    Given that care home workers, are often on the NMW, are looking after the elderly, disabled and vulnerable, even frail retired former bank manager's, stroke victims etc.

    So who provides "better value" to Society, the "care home workers" or the current "younger" generation at Barclays Capital?

    Inequities always exist in society, but inquities should not.

  • Comment number 5.

    Lies. Damn lies. Statistics.

    These figures seem to be in the latter category. Imaginative accounting is still alive and well.

  • Comment number 6.

    No.1

    It is good there is at least one cheer leader for the bank but you have forgotten the thousands of staff at Barclays, the millions of customers who uncomplaining have coughed up Bob's (and others) salary and bonus not to mention the tens of million of taxpayers who have and still do underwrite the whole Barclays edifice.

  • Comment number 7.

    I don't have an issue with the pure size of the bonuses; it never helps to be envious of other people's earnings. I'd like to earn more but then, I chose not to be a banker or a lawyer.

    What I do have an issue with is the banking charges that they apparently need to charge in order to make these profits.

    I have had to pay large bank charges because
    my direct debits go out before my money comes in, because
    the organisations I freelance for can't pay my invoices because
    they have no money because
    local government have withheld money they had already promised because
    they are panicking because
    they have to save immense amounts next year because
    they have had their grants from central government cut because
    central government spent the money bailing out all the banks which were going to go bust.

    But now the banks are making billions of pounds of profits. Why am I still incurring further bank charges because I have previously taken on a £25,000 debt to bail them out (the size of the bailout equals £25,000 per citizen if I remember correctly)?

    It just seems a little harsh. Surely, things being as they are, and all of those guys owe their continued existence to us bailing them out, out of common decency they could at least back off a little on the brutal banking terms? Since they have enough money to give billions of it away on performance related bonuses?

  • Comment number 8.

    "Barclays: Is the balance right between pay and dividends"

    Lets see shall we?
    pay, pensions and bonuses per head at Barclays Capital have risen 20% to £236,000 on average
    and
    the bonus pool is down from £2.9bn to £2.6bn (although again I am a bit confused by the 2009 number, because a year ago it told me that its bonus pool was £2.7bn, not £2.9bn
    and
    On an underlying basis, pre-tax profit rose 2% to 4.4bn.re

    So once again they have reclassified what is good and what is bad debt in order to justify payouts. Shareholders get shafted again.

    I'd say the balance looks great if you're a spiv.

  • Comment number 9.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 10.

    6. At 09:35am on 15th Feb 2011, watriler wrote:
    No.1


    Check out his previous post. He's a real peach.

  • Comment number 11.

    Congratulations Barclays on a great set of results.

    Dividends to shareholders increased from last year - good news for everyone in a Pension Fund or an individual shareholder of Barclays.

    Great contribution to UK Plc through increased payments of both Income and Corporation Tax.

    Shame the BBC had to distort the story on BBC Breakfast this morning when it took the average salary of 17% of the Barclays workforce and presented it without qualification as "Bankers average pay" implying it was the average for all 140,000 staff.

    An apology to all those hard working staff in Barclays UK Retail branches, who will no doubt face hostile customers as a result of this latest piece of inaccurate reporting, is deserved, but no doubt won't be forthcoming!!!

    Come on BBC, at least try to give a balanced report of this good news story on your remaining bulletins today.

  • Comment number 12.

    Robert,

    3 years ago I never paid too much attention to banks, but I'm learning fast. Can you expain why anyone would want to bank with a bank that extracts billions in profits from its customers?

    Its even worse when you realise a bank is essentially a middleman!

  • Comment number 13.

    2. At 09:26am on 15th Feb 2011, watriler wrote:
    The puzzle for me is why there is not a shareholders revolt about the remuneration v. dividend in the context of a mediocre performance.
    =====================================

    Who are the shareholders?

    80% are trustees of pension and assurance funds like Fidelity, Black Rock, Standard Life, Aviva, etc

    10% are tied up in various exchange-traded-funds or trackers

    5% are hedge funds or prop traders

    5% are mom-and-pop investors who tend to be deluded that good employee remuneration equals good shareholder remuneration and as such are cheerleaders for Bob and the gang.

    Of these four groups which will take an active interest in the performance of stock?

  • Comment number 14.

    11. At 09:47am on 15th Feb 2011, North Pennines Man wrote:

    "Shame the BBC had to distort the story on BBC Breakfast this morning when it took the average salary of 17% of the Barclays workforce and presented it without qualification as "Bankers average pay" implying it was the average for all 140,000 staff. "


    Not everyone who works for a bank is a "banker".

  • Comment number 15.

    2. At 09:26am on 15th Feb 2011, watriler wrote:

    The puzzle for me is why there is not a shareholders revolt about the remuneration v. dividend in the context of a mediocre performance.

    I would suspect that the major share holders are in fact other banks, pension funds etc who would be cutting their nose off to spite their face if they were to complain.

  • Comment number 16.

    #13

    And everyone on that list except mom and pop and pension trustees have a vested interest to ensure salaries in the financial sector remain as high as possible.

  • Comment number 17.

    3. At 09:26am on 15th Feb 2011, allan365 wrote:
    ...
    These are 2010 results and John Varley was still CEO so he deserves the credit for the results.

    Indeed, but BarCap was the engine room (as usual) and that is very much Bob's baby..

  • Comment number 18.

    They get rich, we get screwed. Welcome to the "freedom and democracy". They line the politician's pockets, the politicians stand by and let them pillage the nation.

    In case the bankers hadn't noticed we're all losing our jobs and getting pay cuts thanks to them. Time for people to take to the streets and end this outrageous plunder of our nation by these corrupt gangsters and thieves.

  • Comment number 19.

    I'd be pretty miffed is I was a Barclay's shareholder - why will the company not give me a much much bigger dividend as it is so very profitable?

    It is also quite obvious that none of the banks are feeling any of the pain that they have caused to the country. Their highly protected lifestyle MUST be curtailed. If the country feels pain (as we are doing) then so must our banks.

    Our politicians and our regulators are fellow travellers of these legalised and protected robbers and pillagers of the country. We must let everyone know this and not permit the propaganda machine of politicians and regulators explain this away as the result of the bad and evil minded and unemployed workers and unions. This disaster is the the result of slack jawed incompetent regulation and regulators. Even now the idiotic incompetents at the Bank of England are preparing to explain tomorrow why the country MUST take on even more debt - that it has not the slightest hope of repaying - just so the banks can remain flush with cash. The British debt junkie culture must be constrained and what must first happen is that the banks must take the hit on their balance sheets and profit and loss accounts of the unrepairable housing debt they have lent out over the last decade. The craven and incompetent regulators must put up interest rates NOW - some two years late! It they do not they must be fired.

  • Comment number 20.

    10. At 09:44am on 15th Feb 2011, EconomicsStudent wrote:
    6. At 09:35am on 15th Feb 2011, watriler wrote:
    No.1
    Check out his previous post. He's a real peach.

    Loving the (incorrect) assumption that I'm a "he"..

  • Comment number 21.

    Robert, make up your mind - what are you complaining about this time? Are you judging a Bank's worth by the amount of money it lends - wasn't it the advent of cheap credit and the inability of borrowers to repay that contributed hugely to the financial crisis in the first place? Surely a more prudent approach to lending should be encouraged not derided.

    A dividend payment should reflect the health of the business and the ability of the company to make that payment - it shouldn't become a right of the shareholder at all costs. Would you prefer the bank to hold a much lower Tier 1 capital ratio and pay a higher dividend and therefore be at a much greater risk of collapse?

    If the shareholders agreed with your views they wouldn't buy the shares, given the share price has risen I don't see much evidence of professional investors agreeing with your somewhat bias 'analysis'.

  • Comment number 22.

    17. At 10:04am on 15th Feb 2011, kalokagathia wrote:
    3. At 09:26am on 15th Feb 2011, allan365 wrote:
    ...
    These are 2010 results and John Varley was still CEO so he deserves the credit for the results.

    Indeed, but BarCap was the engine room (as usual) and that is very much Bob's baby..
    ===================================

    I think you'll find it is very much Dick Fuld's baby

  • Comment number 23.

    I think the fact that the BBC headline article on this story doesn't even mention the dividend payment tells you all you need to know about whether the balance between pay and dividends is correct.

    The concept of shareholder value seems to have got completely lost since 2007.

  • Comment number 24.

    I haven't quite finished ploughing through the Barclays results' pdf yet...but I am a little rattled by the apparent disregard of the shareholders as stakeholders in Barclays. I'd hoped the annual dividend would have risen to at least 6.5p (ie 3.5p final).

    I am a freelancer living almost from hand -to- mouth and constantly worried about my monthly outgoings. I have not spent any money on heating my home for three winters as my supplementary income from my Barclays shares is earmarked for that purpose.

    Last week I went out to a free BBC radio recording (thanks) in Bloomsbury with three other freelancers. I was staggered to discover that one of us had not written an invoice since August. All four are struggling like no one would believe. In varying degrees we all rely on past savings and investments to smooth out fluctuations in self-employed income.

    Is Mr Diamond aware that it is not only institutions who require at least a modest return from their shareholdings to pay pensions and annuities....but also retail shareholders in their mutitude ?

    Is Barclays being run ONLY for the benefit of the workforce, important though they are ? A CLEAR breakdown of external net revenue amongst stakeholders would be appreciated. Further, this is something which should be brought to the general public's attention.

  • Comment number 25.

    No.6

    I didn't think that Barclays took any government money, so who are the tens of millions of tax payers who have underwritten the whole Barclays eddifice as you put it.

    Surely if we, the tax payer, want to get back our "investment" in the banks we bailed out then we need them to return to a healthy profit and see the share prices rise - we may even make a proffit on the deal! (well we can all live in hope!)

  • Comment number 26.

    Question really - How much of the current deprivation for many people in Britain in the from of job losses and well below inflation pay rises is down to the previous and current governments insuring all the banks, not just RBS and Lloyds and how much of the deprivation is down to the previous government over spending. We hear a lot about the mess that was left but, unless I've missed something, I don't know what the main cause is. If it is largely because of the banks, then people are directly suffering to support the banking industry. In my eyes that is nothing short of a crime and possibly a breach of human rights.

  • Comment number 27.

    21. At 10:11am on 15th Feb 2011, Lockers wrote:
    A dividend payment should reflect the health of the business and the ability of the company to make that payment - it shouldn't become a right of the shareholder at all costs. Would you prefer the bank to hold a much lower Tier 1 capital ratio and pay a higher dividend and therefore be at a much greater risk of collapse?
    ====================================

    If you replaced the word dividend by bonus then your logic would make a lot more sense

  • Comment number 28.

    I am at a loss to understand the silence of the institutions that own Barclays in the light of the brazen plundering of the Bank's profit stream by Bob Diamond and his henchmen. Whilst they are siphoning off £3.4 bn in "performance pay" on top of huge (and substantially increased) basic salaries, shareholders have to make do with a paltry 5.5p a share. The total value of dividends is less than 20% of this "performance pay", and also less than 20% of the pre-credit crunch return to shareholders. Small wonder that our top executives are so thrilled at appearing alongside Afircan dictators, Russian oligarchs and the rest of the global kleptocracy at Davos each year.

  • Comment number 29.

    pay, pensions and bonuses per head at Barclays Capital have risen 20% to £236,000 on average
    ======================

    Does this arithmetic mean figure include the cleaners, the security guards and the bloke who changes the light bulbs?

  • Comment number 30.

    The same situation obviously exists as before the crash. Shareholders have representation within their companies - it's called a board. One of the biggest problems we have in Britain is the complacent and lazy attitude of directors. They are meant to challenge executives and deal with the different priorities of owners vs employees, but instead they approve ridiculous and unwarranted compensation packages (for themselves as well as execs). Bonuses aren't the problem, bonuses for the wrong results are. And boards are meant to police the deals.

    If banks are so important, why not legislate for a majority of independent directors, preferably including non-bankers who can ask important "why"s that someone from the industry would just accept because things have always happened a certain way (Google groupthink for evidence).

    We've seen the effects of complicit and incompetent boards at banks, Enron, a host of other examples. It's time that directors were held more to account.

  • Comment number 31.

    In a free society profits on this scale would not be possible. Banking regulation, fiat currency, FRB and banking licenses restrict competition and allow earned wealth to be plundered.

    Add to this banking bailouts and guarantees and you get the turkey shoot that we are witnessing globally.

  • Comment number 32.

    Barclays shareholders have lost more than 50% of their investment in just under four years since the share price peaked around 770p in March 2007.

    The value of the sale of BGI was not returned to shareholders, but used as a patch to keep the bank afloat.

    But somehow it's okay for bankers to skim the profits at a ridiculous level before making their shareholders whole.

    AqualungCumbria was right. The shareholders who have the clout and who should be taking action--the pension funds and investment managers--have a massive conflict of interest because they're part of the same industry.

    And if we get another financial crisis, no changes have been put in place to protect the taxpayer, who'll have to bail them out all over again.

  • Comment number 33.

    Great news for the banks! What about each bank sponsoring the building of a few new schools in the uk, or even giving attention to refurbishing them? It would be loose change to them.

  • Comment number 34.

    The fact that the dividend is so low shows that regulators and the board are still worried about the future.

    Why then is overall pay going up?

    As we all know it proves that banks are run for the benefit of the staff that are highly paid - I'm guessing the staff who work in the branches didn't get a 20% pay increase this year!

    The fact is the profit level can be manipulated through provision for bad loans etc.

    They can think up any figure and then take a cut of this!

    PS.

    What about the off balance sheet 'Protium' vehicle - this is fully financed by a £8bn loan of Barclays - yet is unavailable for any shareholder scrutiny.

    The managers of Protium get the upside yet Barclays shareholders take on all the risk

    Its a complete outrage - check out the article below...

    http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/8320450/Barclays-toxic-Protium-deal-wont-please-banks-investors.html#

  • Comment number 35.

    #21

    "Would you prefer the bank to hold a much lower Tier 1 capital ratio and pay a higher dividend and therefore be at a much greater risk of collapse? "

    NO NO NO

    Keep the capital, keep the dividend - less on remuneration!

    You have missed the entire point of Robert's blog ....on purpose!

  • Comment number 36.

    Good for Barclays and the other merrymen of the finance indudtry.......but lousy for their clients, shareholders and depositers!
    Let me get this right.... shareholders bankroll the original business, depositers keep the show afloat and customers and clients get fleeced so that some clever clog staff can set ridiculous fees for loans, mergers etc. That's supposed to be good for us all?
    The sooner the shareholders and depositers turn on these financial vampires the better. All they are really doing is making services unncessarily ever more expensive and using other people's money to do it. Not exactly rocket science is it? It is only a licence to print money for very little effort on their part and the true owners of these business see very little in return by comparison.

  • Comment number 37.

    So let me get this right....

    Barclays lent...

    £115bn to customers

    £65bn to middling size corporates

    So far £180bn lent

    Plus there was more lending to large companies and governments etc we don't know how much this is lets say £20bn

    And the profit on £200bn of lending is...

    £6bn

    a return of 3%!!!!!

  • Comment number 38.

    No18 SleepinSpurs,
    With Barclays having 315 subsidiaries in one tax haven alone, and with the profits more than likely being taxed 'offshore' there will be plenty opportunities for the gangsters to which you refer, being involved in sharing the loot.

  • Comment number 39.

    25. At 10:22am on 15th Feb 2011, David_from_Colchester wrote:
    No.6

    I didn't think that Barclays took any government money, so who are the tens of millions of tax payers who have underwritten the whole Barclays eddifice as you put it.
    =======================================

    Barclays may not have taken government money in terms of recapitalisation but the equity stakes in RBS and LBG are only a small part of the subsidy and one that may or may not show some sort of profit.

    All UK banks benefit from an implicit guarantee that they will not be allowed to fail. This allows them to borrow much cheaper in the money markets as would otherwise have been the case. The BoE, itself, is also maintaining a lower than necessary base rate in order to maintain bank solvency. The price for the rest of us is inflation. The BoE also introduced quantitative easing which was designed to lower the long-end of the interest rate curve by purchasing government bonds from the banks. The banks have used this money to either lend back to the UK government at higher rates of interest or invest it in equity and commodity markets causing a new boom in those markets. There is also an asset insurance facility, currently used only by RBS, but open to any main UK bank, such that the UK government guarantees bank assets (debts) for the receipt of a mediocre insurance premium to say the least.

  • Comment number 40.

    I may have this completely wrong but: if the banks have been bailed out by the taxpaying population, we are now shareholders of the business so is it not a good thing that Barclays is performing well?
    Also it is never reported as to whether these bailed out banks are due to repay the 'loans' from the government?
    If they are due to repay this money then surely the government should be getting repaid before the employees receive huge bonuses?

  • Comment number 41.

    28. At 10:26am on 15th Feb 2011, benthamite wrote:
    I am at a loss to understand the silence of the institutions that own Barclays in the light of the brazen plundering of the Bank's profit stream by Bob Diamond and his henchmen.
    ====================================

    I refer you back to my answer 13.

  • Comment number 42.

    There is one big reason why the shareholders don't revolt. They are mostly held by institutional shareholders that have massive conflicts of interests ie another part of the bank is doing business with Barclays and doesn't want to rock the boat. Plus as long as the 'bonus club' stick together it is impossible for anyone to break the club.

    The people who suffer are our pension funds and investments managed by people who themselves are more concerned by staying themselves in the bonus club, so there is no chance they will rock the boat! The next big scandal is when we all retire and rwalise the fund managers have robbed our pensions with huge fees to pay bonuses, allowed their mates to rob the companies they have invested in. They will be retired in the south of france some where whilst we are staking shelves in tesco to top up our sad little pension fund.

    This isn't a story its actually happening.

  • Comment number 43.

    Wow. So 25,000 bankers are on average worth 1.5 prime ministers salaries each....

    And they made that money by exploiting a privileged position in the markets to apply a levy on companies borrowing and funding costs, the price of commodities and the excessive charges applied on the investments and pensions of the general population.

    Oh. And they want us to stop having a go about the billions of cheap funding they are still getting from the taxpayer to help boost these profits further - even Barclays who didn't get an explicit state bail out.

    Personally I won't stop banker bashing until they can genuinely show remorse, clearly demonstrate that what they do has a social purpuse and show their profits are not derived from the state guarantee and privileged position they have.

    That will probably mean than the average city bankers salary is significantly less than the prime minister and the people who are genuinely taking the risk - the shareholders and pension funds are getting most of the rewards rather than a lot of very clever bankers.

  • Comment number 44.

    All the banks lent too much, with too much risk in the boom years.
    Then in the credit crunch, we the public had to bail some of them out as they couldn't be allowed to fail. (Don't think this applies to Barclays)
    All that matters now is who still owes what and when/if it will be repaid.
    More importantly what's being done so it can't happen again - to do this we need to separate all the high street banks from what I would call the high stake gamblers/capital investors?
    If they want to continue to gamble and continue to pay bonuses than that's entirely up to them - but this shouldn't be on the back of our bail out or thinking that we'll be there for them next time.
    But this very expensive lesson doesn't seem to have been learned and nothing is in place to stop it all happening again - Vince where are you!!

  • Comment number 45.

    Bob, this is a little bit superficial. You have to take dividends and share price movements together to get the impact on shareholders. Dividend levels in public companies is more to do with funding than shareholder rewards.

    Bank figures are always distorted by asset valuations estimations, including the big-one, bad debts and clearly you have spotted some of this, but it needs to be compared with other banks' positions to get a view on how prudent or gung-ho they are. You have also branded the revaluation of its debt as "spurious" rather than giving us an explanation of it. Why have they done it? Or are you saying that their auditors may have dropped a massive clanger?


    In terms of average pay you also need to tell us:

    - the impact of foreign exchange differences for the foreign staff
    - change in the workforce mix. A big increase in average wages can be caused by shedding a lot of those in the lower-paid brakets or taking on more highly paid staff.

    These effects could result in a big difference between what individual employees are experiencing and the apparent average change.

    Don't you have some analysts on the staff at the BBC to do this number-crunching for you?


  • Comment number 46.

    36. At 10:41am on 15th Feb 2011, gadfly wrote:

    The sooner the shareholders and depositors turn on these financial vampires the better.

    As I and others have said the major shareholders have to keep quiet , but depositors are a different matter if they can they should take the hint and move there deposits elsewhere, they are obviously not valued by the bank so it might be the right time to move on new tax year coming and all.

    And remember for every single account moved because of there beloved leveraging it has a 10/20/30 times multiplier attached, just a thought for those that can.....

  • Comment number 47.

    What too many people fail to recognise is that although the press/media all state that the average salary is now £236K, the fact of the matter is that the majority of staff in high street branches is nowwhere near this figure. A few very highly paid people completely distort the "average". The vast majority of people who work for Barclays in the high street are under 20k a year, far closer to the national average, and in fact are going to be lucky to get a 1% pay rise (I know this for a fact as my wife works for Barclays).

  • Comment number 48.

    40. At 10:53am on 15th Feb 2011, kevpheaton wrote:
    I may have this completely wrong but: if the banks have been bailed out by the taxpaying population, we are now shareholders of the business so is it not a good thing that Barclays is performing well?
    ===================================

    The problem is that good performance is privatised but bad performance is socialised.

  • Comment number 49.

    "The amount of revenue the bank uses to pay its investment bankers rose to 43% from 33%, the bank admitted, as it reported 2010 profits of £6bn."

    see article below

    http://www.guardian.co.uk/business/2011/feb/15/barclays-capital-average-pay-236000-pounds


    Sorry Barclays there is no excuse for increasing the proportion of revenue used to pay staff!

    Why wasn't that extra 10% of revenue distributed to share holders or used to shore up capital?

    43% of revenue on staff pay - its crazy. The reality is it was probably lower for the retail staff so no doubt was over 50% for investment banking staff!#

    If an electricity company paid 43% of revenue in staff costs the guy coming around to check the meter would be on £200k!

  • Comment number 50.

    All this talk about a bank's results.Wasn't it the libraries and librarians who caused the financial crisis? Isn't that why they're shutting them down and not the banks?

  • Comment number 51.

    How quickly they forget....when the world was crashing around Varley's ears a year or two ago he did a deal with a sovereign wealth fund at an outrageous 15% coupon. When the local institutions squealed he did a special deal for them at, I think, 9%. Every other shareholder was left to swing in the wind. Little chance, I think, of any institutional investor complaining about imbalance.

  • Comment number 52.

    18. At 10:04am on 15th Feb 2011, SleepingSpurs wrote:

    They get rich, we get screwed. Welcome to the "freedom and democracy". They line the politician's pockets, the politicians stand by and let them pillage the nation.

    In case the bankers hadn't noticed we're all losing our jobs and getting pay cuts thanks to them. Time for people to take to the streets and end this outrageous plunder of our nation by these corrupt gangsters and thieves.

    ==============================================================

    The Tory party are the political wing of the banking industry!

    What did you expect

  • Comment number 53.

    18 - you wrote...In case the bankers hadn't noticed we're all losing our jobs and getting pay cuts thanks to them..... You are one of the many who have been led by the nose and want to believe that all the problems are down to the banking industry. This is not the case. Yes, they were a few who took chances but these guys were supposed to be regulated by entities like the FSA who in turn by the Bank of England and of course the, then, government. This is conveniently swept under the carpet to lay the blame as far downstream as possible. Even if this was totally correct, the few traders involved form a very small percentage of "real" people who work in banks whether investment or retail. These are also "real" people who do not get the big bonuses, the big increase in salaries as described but do face the same increases in petrol, gas, electricity etc as the "other" man in the street. It is far to easy to label all bankers as bad and corrupt and are to blame for all the current suffering.

  • Comment number 54.

    50. At 11:14am on 15th Feb 2011, simca1000 wrote:
    All this talk about a bank's results.Wasn't it the libraries and librarians who caused the financial crisis? Isn't that why they're shutting them down and not the banks?
    ====================================

    Finally some sense, and it is only BBC bias and political correctness that prevents this message from getting across.

  • Comment number 55.

    19. At 10:05am on 15th Feb 2011, John_from_Hendon

    JFH I am impressed

    “It is also quite obvious that none of the banks are feeling any of the pain that they have caused to the country. Their highly protected lifestyle MUST be curtailed. If the country feels pain (as we are doing) then so must our banks.”

    Well said that man/woman!

    If it is correct that the major shareholders are financial institutes then there can never be a shareholder revolt – it would be incestuous. Therefore we must rely on government legislation and a strong regulatory base but nothing as really changed since the passing to a new government. Therefore there is only one option left and that is for democracy to work i.e. us!

    If you are happy with our banks then great stay with them and fight to keep the status intact. If you are not – you know what to do!

  • Comment number 56.

    53. At 11:24am on 15th Feb 2011, Phil - London wrote:
    ===================================

    I think most people realise that is the financial system that is at fault, and not the ordinary bank employees. The system was bailed out and subsidised by government and has not been made fit for purpose. The main beneficiaries of the system, investment bankers and traders, are still benefitting from it, greatly. Because the system does not work, another crash is inevitable. Perhaps it will happen in 2, 10 or 20 years but it will happen and it will be much worse because moral hazard has been enhanced and the sovereign will no longer have the power to bail it out.

  • Comment number 57.

    • 50. At 11:14am on 15th Feb 2011, simca1000 wrote:
    All this talk about a bank's results.Wasn't it the libraries and librarians who caused the financial crisis? Isn't that why they're shutting them down and not the banks?
    XXXX

    PRICELESS!

  • Comment number 58.

    #35

    "NO NO NO

    Keep the capital, keep the dividend - less on remuneration!

    You have missed the entire point of Robert's blog ....on purpose!"

    --------------------------------------------------------------------------

    Great idea - strip out the (net) contribution of the Investment Bank and you are left with a much much smaller profit attributable to share holders, so it makes perfect sense to reduce staff renumeration, lose the talent pool that generates the bulk of your group profits and therefore end up cutting your dividend to shareholders - I can see that makes perfect sense - pure Peston logic at it's best!!!

  • Comment number 59.

    53. At 11:24am on 15th Feb 2011, Phil - London wrote:

    good to see not everyone has been brainwashed into hating the financial sector.
    dont let the fanatics change your mind

  • Comment number 60.

    "So what about the contentious issue of pay for Barclays Capital's 24,800 investment bankers?"

    Are you referring to the number of employees?

    How can there be 24,800 "investment bankers" working at Barclays Capital?

    According to Wikipedia, "over 7,000 people work in the IT division", so it would seem that you are labelling these people as "investment bankers".

    The *median* salary of a Barclays Capital employee would be an interesting figure for comparison with your 'average income per head'.

  • Comment number 61.

    A graph can be worth a lot of words. You'll find one showing why performance-related pay at Barclays is a bad joke for investors here:

    http://cantankerous.co.uk/?p=603

    It contrasts dividends and share price performance at Barclays and the pay:income ratio at Barclays Capital, normalised to 2005.

    This is NOT a graph you'll find in the Barclays 2010 Annual Report or in a Bob Diamond presentation.

  • Comment number 62.

    59. At 11:49am on 15th Feb 2011, avalanche_invesmtents wrote:

    53. At 11:24am on 15th Feb 2011, Phil - London wrote:

    good to see not everyone has been brainwashed into hating the financial sector.
    dont let the fanatics change your mind
    ==============================================================

    You don't have to be a fanatic to hate the banking industry, just a working class chap, whose taxes have been used to bail you lot out when you ****ed up big time!

  • Comment number 63.

    We have to come up with a new way of measuring the performance of the banks rather than the conventional method of profits, dividends etc.

    I suggest developing a "usefulness" index based on a companies impact on rebalancing the economy in areas such as support for industry, funding start-ups and so on and so forth.

    On an ad hoc assessment and using an index of 1 to 10 with 10 being "very useful" I would rate Barclays at about 0.5.

    Any advances?

  • Comment number 64.

    I should like to make a suggestion about Investment Banker's bonuses. Is it possible for someone from the BBC to get a Banker into the studio or on the phone for an interview. The purpose of this would be for them to do a PR job and explain to the public why they deserve their bonuses. I am convinced that this is a massive public interest story and that we are all interested to know what it is they actually do for the economy that warrants their rewards. This could very much help toward the feeling of `us and them` in the country.

  • Comment number 65.

    #58

    So anything less than a 20% increase is a reduction?

    I prefer Peston's logic to yours.

  • Comment number 66.


    62. At 12:02pm on 15th Feb 2011, Governmentdept4propergander wrote:

    You don't have to be a fanatic to hate the banking industry, just a working class chap, whose taxes have been used to bail you lot out when you ****ed up big time!

    ===========================================================

    see this is the sort of problem that Phil was noticing. the financial crisis was not the fault of every bank worker, every mortgage advisor, every financial advisor, it was the fault of the few at the top who took huge risks with huge amounts of money and yet everyone in the financial services area are being blamed.

    you just proved this point by saying "when you ****ed up big time!"......well i was in my first year of A-Levels but if i managed to destroy the global banking system by handing in an essay late then i appologise. You just shout your rhetoric blindly at anyone who has a different view to yourself without first thinking about what your saying.

    alternatively you could do what my mum told me to do which was "that if you have nothing nice to say. say nothing".

  • Comment number 67.

    danj180 wrote "43% of revenue on staff pay - its crazy. The reality is it was probably lower for the retail staff so no doubt was over 50% for investment banking staff!#"

    Whether it is crazy depends on what you compare it to.

    By football club standards it is positively cautious!

    By professional services firms such as lawyers and bankers it is a little high but still within normal range.

    By traditional bank standards and large company standards it is definitely too high, but 33% would not have been too unreasonable.

  • Comment number 68.

    Peston you are like a dog with a bone. Leave the Banks alone now... its getting extremely dull.
    High time we were picking on some Oil companies with big profits (BP excluded) and taxing them or getting them to reduce the cost of fuel for us punters!

  • Comment number 69.

    Quick question... Can someone explain to me how the bailed out banks can pay off their bail-out? I thought it was an equity purchase by HMG - thus giving HMG the choice as to when to "demand" their money back by selling the shares. Or is there something in the agreement that allows RBS/Lloyds to force the gov't to sell?

  • Comment number 70.

    "At 09:49am on 15th Feb 2011, newblogger wrote:
    Robert,

    3 years ago I never paid too much attention to banks, but I'm learning fast. Can you expain why anyone would want to bank with a bank that extracts billions in profits from its customers?"

    Your local supermarket "extracts billions in profits from its customers", as does your electricity company, your mobile phone provider, the publishers of the magazines you read, probably the football club you support. Other companies who "extract billions in profits from their customers" include digital TV and broadband providers, the companies who sell you your petrol, the companies that produce your cosmetics and pharmaceuticals, the cinema chain you visit on a weekend - do I need to go on?

    *All* private companies, which of course includes banks, exist to make profit out of their customers. Some are better at it than others. You want to do some shopping, you go to the supermarket, they provide the things you want - special offers, a wide choice of products, free car parking etc - you pay for your shopping, they make a profit. It's the same with banks. You want services - direct debits, a card you can use all over the world to pay for things, a mortgage, a network of cashpoints, internet banking etc etc - the bank provide you with services at a cost, they make profit.

    The impact of the activities of one small part of the banking sector on the financial crisis of recent years is not in doubt. However, can we *please* as a country get over the belief that banks are charities, or don't deserve to make any profits? They are private companies. Nobody complains about the profit extracted from them when they buy a tin of beans, or go to the cinema etc, banks are just private companies like all the others.


  • Comment number 71.

    Interesting comment no.6 from watriler: "not to mention the tens of million of taxpayers who have and still do underwrite the whole Barclays edifice." - Barclays haven't taken any taxpayers money and have never looked like they were going under, so how can anyone justify moaning about them using taxpayers?

    The fact is all banks are businesses and they're there to make money, to attract the best staff and make the most money they also have to pay the best and provide the best working environment. Quid pro quo and all that....

  • Comment number 72.

    59. At 11:49am on 15th Feb 2011, avalanche_invesmtents wrote:
    53. At 11:24am on 15th Feb 2011, Phil - London wrote:

    good to see not everyone has been brainwashed into hating the financial sector.
    dont let the fanatics change your mind
    ====================================

    Obviously narrow self interest is informing your own judgement somewhat but could you explain to the rest of society why they should not hate the financial sector?

  • Comment number 73.

    I think the interesting aspect to these results is that the underlying figures (when you strip out exceptionals such as revaluing the bank’s debt) are pretty mediocre. I find myself for once siding with the socialists (but not for the same reasons) in that it does seem unjustifiable that total compensation has been increased on the back of that – it certainly used to be the expectation that total comp would fall when underlying profits don’t do anything. I wonder if the explanation is that Barclays are seeking to ramp the pressure up on RBS and Lloyds who really are going to struggle to increase real cash compensation (i.e. strip out all the deferred shares etc) because of the Government ownership and will therefore struggle to keep their teams happy, and more importantly, stable. A hobbled investment bank at RBS in particular would be fairly welcome from Barclays’ perspective I would venture. Increasing compensation despite moribund current profit growth might therefore be a relatively cheap way of securing greater profits in the future

  • Comment number 74.

    22. At 10:15am on 15th Feb 2011, Reticent_Trader wrote:
    17. At 10:04am on 15th Feb 2011, kalokagathia wrote:
    3. At 09:26am on 15th Feb 2011, allan365 wrote:
    ...
    These are 2010 results and John Varley was still CEO so he deserves the credit for the results.

    Indeed, but BarCap was the engine room (as usual) and that is very much Bob's baby..
    ===================================

    I think you'll find it is very much Dick Fuld's baby

    ----------------------------------------------------------

    So Diamond is holding the adopted baby, snatched from Fuld at the behest of Paulson. Meanwhile, all the naughty siblings were sold into the nationalised creche, no doubt to grow up with ASBO's - the Assigned Stinking Banking Offspring.



  • Comment number 75.

    see this is the sort of problem that Phil was noticing. the financial crisis was not the fault of every bank worker, every mortgage advisor, every financial advisor, it was the fault of the few at the top who took huge risks with huge amounts of money and yet everyone in the financial services area are being blamed.
    ===================================

    This is not the case. People blame the system. The people at the top are the people who created, lobbied for, self-regulated and benefitted graetly from the system.

    People lower down the order, like yourself, are often supporters of the system. In part due to ill-considered ideology, in part due to the self-interest of one day becoming a BSD yourself, in part due to old fashioned servility and sychophancy.

    As a supporter and advocate of the system you deserve the opprobium that comes your way.

    This does not apply to the legion of bank tellers, branch managers, mortgage advisors trying to do their job and scrape by.

  • Comment number 76.

    • 66. At 12:23pm on 15th Feb 2011, avalanche_invesmtents wrote:

    62. At 12:02pm on 15th Feb 2011, Governmentdept4propergander wrote:

    You don't have to be a fanatic to hate the banking industry, just a working class chap, whose taxes have been used to bail you lot out when you ****ed up big time!

    ===========================================================

    see this is the sort of problem that Phil was noticing. the financial crisis was not the fault of every bank worker, every mortgage advisor, every financial advisor, it was the fault of the few at the top who took huge risks with huge amounts of money and yet everyone in the financial services area are being blamed.

    you just proved this point by saying "when you ****ed up big time!"......well i was in my first year of A-Levels but if i managed to destroy the global banking system by handing in an essay late then i appologise. You just shout your rhetoric blindly at anyone who has a different view to yourself without first thinking about what your saying.

    alternatively you could do what my mum told me to do which was "that if you have nothing nice to say. say nothing".

    Xxxxx

    This is were we differ – if you are inside the system and knowingly, yes knowingly continued to use the system, knowing that it was having a negative effect on ‘what ever’ then you are as guilty as the system designers.

    There are situations were ignorance is no defence and this is one of them.

    Incorrectly we label this system as capitalism: it is not! It is a spawn of capitalism contrived in finance for the benefit of finance and the collaborators ate heartily at their masters table.

  • Comment number 77.

    I see a couple of posters have started to make the "attracting and retaining talent" argument to justify the rises. The fact is the recession drove markets so low and left countries in such dire need of finance that Barclays could employ monkeys with calculators and have a better than even chance of making money. Never has a "talent" been so wildly overstated as that of the investment banker.

  • Comment number 78.

    70. At 12:32pm on 15th Feb 2011, LeedsPilgrim wrote:
    The impact of the activities of one small part of the banking sector on the financial crisis of recent years is not in doubt. However, can we *please* as a country get over the belief that banks are charities, or don't deserve to make any profits? They are private companies. Nobody complains about the profit extracted from them when they buy a tin of beans, or go to the cinema etc, banks are just private companies like all the others.
    ====================================

    You need to look up what moral hazard means and what are "economic rents" and have a think about what you have written.

    Banks are different from other private companies because of the lack of competition, their central position in credit creation, and the fact that their losses are guaranteed by the government.

    As such their excess profits (given the risks) are essentially extracted from other more viable businesses, tax payers and all citezens through the resultant inflation.

    It has become a cost too high to pay.

    This is why people complain about the excess profits of the banks, and not the (often) hard won profit of other private businesses.

  • Comment number 79.

    Firstly I would like to congratulate Robert on a well written article. I spend more time on the FT site - and Robert is showing his pedigree to good effect.

    Sad to see there are a smattering of apologists on this site.
    Can I refer them to the following rather well written view point.

    http://www.ft.com/cms/s/0/a6eb9856-385a-11e0-959c-00144feabdc0.html#axzz1Dw4OFRmy

    Stated simply the banks made massive profits through the mid to late noughties by leveraging - that is by borrowing cheaply on the Money Markets, using the cheap money to generate profits then plowing this back into dividends and bonuses.

    A well trodden path with rather obvious risks. When the cost of money increases the strategy falls apart.

    Now what really galls me is that in the good times the "talent" involved (that is the investment banking community) was rewarding itself massively and claiming that if it did not do so the same good times would go away.

    When the good times did go away did any of them try to explain how - despite their well renumerated talent - they were unable to see the writing on the wall ?

    And now they are doing it again as if nothing had changed.
    God help the rest of us.

  • Comment number 80.

    75. At 12:40pm on 15th Feb 2011, Reticent_Trader wrote:

    "People lower down the order, like yourself, are often supporters of the system. In part due to ill-considered ideology, in part due to the self-interest of one day becoming a BSD yourself, in part due to old fashioned servility and sychophancy."

    WOW, so im not a supporter of the system because it paid my father and therefore paid for my education/holidays/birthdays/christmas's/food/heating/electricity but really its my "ill-considered ideology".......hmmmm how silly of me to want to support a system thats helped myself and my family every day for the last 35 years (how long my dad has worked in finance) and which will support me and any family i have in the future.

    and yes it is self interest to want to grow up and be successful and have lots of money, is it so terrible that i want to be able to provide a good life for myself and family....if so then yeah im really a terrible person.

    "As a supporter and advocate of the system you deserve the opprobium that comes your way."

    so if a tottenham hotspur fan smashes me over the head because im an arsenal fan thats ok. because i support a system. those who "broke or misused" the system deserve the opprobium but not the millions who back the system for their own reasons.

    "This does not apply to the legion of bank tellers, branch managers, mortgage advisors trying to do their job and scrape by."

    but it does apply to me clearly. i earn £12,000 a year, does this mean that i am exempt from any abuse that could be hurled at me for supporting "the system"



  • Comment number 81.

    "Well Barclays says that the bonus pool is down from £2.9bn to £2.6bn (although again I am a bit confused by the 2009 number, because a year ago it told me that its bonus pool was £2.7bn, not £2.9bn)."

    I thought bankers were supposed to know what they are doing when it comes to numbers?

    Hey, what's all the fuss?

    The difference is only £0.2bn (£200million) out of an annual £2.9bn bonus pool. Maybe someone forgot about that two hundred million pounds, or it fell down the back of a sofa.

    Small change to these leeches really.

  • Comment number 82.

    I'm glad that a few people on this have the sense to separate the real culprits here instead of assuming that everyone who works for a bank gets a salary of approx £236,000 plus huge bonus. I work for a bank, and work hard (average 14 hours per day in the office) I'm earn around the £20k salary mark and for the last 3 years the bonus I've been due to receive has been held back. My partner was made redundant and we live pay check to pay check trying to make ends meet. I sincerely wish I had an excessive salary to fall back on now that my bills are rising as the choice has to be made on keeping up to date on bills or buying food. Maybe before people start ridiculing the bankers they need to take a step back and think. Its not nice having to listen to it. Yes some people had bad judgement and believed their own press about how untouchable they were. Why did the people who regulate them not do something about it. There is more at fault here than the bankers, why don't we step back, fix it and move forward. Harping on about it isn't going to make things better.

  • Comment number 83.

    62 - and therin lies your problem. You only focus on the very few banks in the UK and as previously stated the vast majority of empployees of Barclays (for example) were not involved in the dealings that caused problems or earn the so called average salary. The vast majority are just like yourself. Unfortunately you have become blinded by the incessant inaccuracies on the press/media that you want to lay the blame at all bankers. Like it or not - you are wrong and simply being unfauir to a very high percentage of people who are suffering in exactly the same way as yourself (and not a single expletive used either)

  • Comment number 84.

    Robert

    Yet again the majority of the comments I read on your blog follow the rather boring banker basher tone without really looking at the figures.

    Yes - Barclays will have indirectly benefited from the Government Liquidity scheme, but they did not take any taxpayer money and in fact probably contribute more to tax than most companies in the UK.

    If you look at the figures, Barclays have not made the profit from retail customers, it has come from the investment side of the Bank, hence the large bonus and salary increases for INVESTMENT bankers (deserverdly as they actually generated the profits) and not the frontline staff in branches or business banking who are targeted by so many ignorant people who believe what they hear, see and read (including this blog!).

    It is about time that it is made clear the difference between retail banking and investment banking and the fact that employees in retail banking are probably paid less that the average UK wage and undeserverdly receive abuse from customers who believe that "I pay your wages, lend me money".

  • Comment number 85.

    Sorry to sound simplistic - I've probably missed something here. To the wider cash-strapped public (including me) its not about bonuses v salary. Its the total package...
    I've had my pay frozen for the last year, no sign of a thaw, nor likely to be.
    Dear Barclays, just dont bother to justify your figures year on year when you massage them to fit whatever your current policy happens to be. Bulls**t baffles brains...sometimes.

  • Comment number 86.

    No 82 follow on: I also meant to say, that during this time I've seen a lot of my friends lose their jobs within the banking industry, they are normal people with families to support. We are not getting away without some repercussions.

  • Comment number 87.

    72 and 75 - I would say, reticent_trader, that you are in the minority by simply blaming the sector sas a whole. The vast majority of the public, and the writers on here today, are blaming bankers as a generic term. In my first mail I did allude to problems in the financial sector which allowed bankers to take the ridsks that led to the problems. However, these people were, in theory, monitored internally and then by external agencies all the way up to the government. The final responsibility laid with the government who turned a blind eye so they could reap the benefits of all the profits that were being made before the recession. So again I say, it is a very small percentage of highly paid people who caused the problems and not the vast majority of normal people who have chosen to make a career in banking ( I guess I should also point out out that not all bankers are traders who take these risks but I assume that is likely to fall on deaf ears as well...!!).

  • Comment number 88.

    77 - I work in an investment bank. I am not a trader but I would argue that a monkey cannot do my job. Those who do their job well in this industry (which employs many more people than just the highly paid traders) usually do a good job and like in all walks of life like to be paid well for it. This does not always happen, as in all walks of life, but when they do then there is the distinct possiblity that they will be head hunted to work for a rival firm (I think this is possibly unique to the industry as in relative terms it is such a small community). There is an argument that you have to pay well to keep the best. As always, this gets exploited over the years and I agree there is a tendency for this to be made into a more generic rise across the board rather than for specific individuals - but this is not always the case. Do not dismiss terminology simply because it is linked to the financial sector which is now of course considered as taboo and therefore everything about it must be wrong and needs to be changed. This is not the case.

  • Comment number 89.

    I hope the financial community and the politicians are reading these blogs and beginning to wake up to just how outraged members of the public (taxpayers) still are on this issue.

    Bring on the election and let's make some wholesale changes.

    "68. At 12:29pm on 15th Feb 2011, Hamish wrote:
    Peston you are like a dog with a bone. Leave the Banks alone now... "

    On the contrary Hamish (who I assume must be another banker). RP is a top class journalist who knows instinctively when something fishy is going on. The rest of us (non-bankers) can also see that this wholebanking episode is full of grubby little secrets all just waiting to be discovered. And the bankers don't like it one bit! We've discovered their dirty wee scam and they are now panicking.

    It's RP's job to keep digging away at this story, which is of HUGE public interest, until we get to the real meat on the bone.

    Keep up the good work RP!

  • Comment number 90.

    #70

    You were making a good point till you finished with:-

    "Nobody complains about the profit extracted from them when they buy a tin of beans, or go to the cinema etc, banks are just private companies like all the others."

    Just not true. Many complain very loudly when feeling ripped off, even with a tin of beans, it is the difference between a profit and excessive profits.

    Plus supermarkets and cinemas et al don't destroy peoples lives through greed and hubris.




  • Comment number 91.

    "WOW, so im not a supporter of the system because it paid my father and therefore paid for my education/holidays/birthdays/christmas's/food/heating/electricity"

    So you benefitted greatly, good, so did I, but you need a bit more awareness of the society you live in. Probably 80% of the population did not see any benefit. It is becoming ever more clear to me that the system is junk and only benefits a fortunate few. If you think that makes it Ok then that's up to you.

    But can you honestly not see why the majority of the population who have not benefitted and do not stand to benefit from the financial system and are in fact victims of it should chose to attack it?

    And your defence is simply: stop picking on me because I am just trying to exploit a rigged, unfair, not-fit-for-purpose system for a good life for me and my family at the expense of most of society?

    "so if a tottenham hotspur fan smashes me over the head because im an arsenal fan thats ok. because i support a system."

    I don't see the connection but I have never hit an arsenal fan. If arsenal beat spurs well that's eleven men versus eleven men kicking a ball around.

    "but it does apply to me clearly. i earn £12,000 a year, does this mean that i am exempt from any abuse that could be hurled at me for supporting "the system""

    No, as long as you unquestionably support a financial system that makes the lives of most people harder for the reasons you laid out then you deserve the abuse you get.

    I have benefitted from the system too. I also question it and see it's faults. I get abuse hurled at me. I take it.

  • Comment number 92.

    Good idea #62. It is worth noting that talking about "the bankers" is about as useful as talking about "the left-handed" in terms of describing what they do, what skills they need and how much they are paid.

    There is a lot of vitriol directed at banking earnings / pay linked to overdraft charges and other retail banking issues. Retail banks (independent or part of conglomerates like Barclays) always generate rather pedestrian ROE and do not tend to pay significant bonuses. Those will tend to go to front office staff at the investment banks, who have very little to do with retail banking (or small cap company lending, etc.)

    Front office staff are renumerated in proportion to profits they bring, much like estate agents and many other comission based professions. There is nothing better that the bank CEO would like than to cut their pay, but he is competing for the best individuals not only with other banks, but also with hedge funds, asset managers etc.

    Any good risk taker will, every now and then, work out the present value of either staying in his current position, or moving to another role (in another institution, or starting a hedge fund etc.), then act accordingly; I know I do.

    So the bank CEO has to pay them sufficiently well to keep the business generated and be able to maintain group ROE at the levels shareholders demand; the CEO likely looks at amount of capital each of the bank's arms (including high pay / risk / return trading operations, low pay / risk / return retail, etc) needs to be allocated to achieve required ROE on the Markowitz efficient frontier.

  • Comment number 93.

    Rough figures

    Barcap bonuses = 40 percent of revenue.
    dividend = 16 percent of revenue

    Barcap doesn't need shareholders, it just needs the taxpayer guarantee it gets by piggy backing on Barclays retail business. The tragedy is without the guarantee Barcap has no revenue.
    In other words, our national economy is being run by govt as a full liability partner of the Investment Banks, and it is our full liability that makes them profitable. Which begs the question, where's the taxpayer's equity partner share of revenue. All business' pay taxes so that isn't it.
    Underneath this is a belief in govt that without Investment Banking the UK economy will sink. But is that right. We need millions of new homes, new ports, towns, villages and manufacturing sites in cost effective locations in the south and east. That's big money and big growth. It seems rather pointless to risk everything on investment banking for ever. Surely we should diversify to put our economy on a stronger footing.
    But that is asking politicians to do what's best for the country rather than what's they like to think will get them re-elected.

  • Comment number 94.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 95.

    I don't get you folks who get all bitter and angry about a bunch of folks getting paid. These people earned their bonuses as reward for the money they make for the banks. If you think they're paid too much, you should go and try doing what they do. Anyway, the people who really get paid have nothing to do with you and I or loans to small businesses - they earn their money by creating and selling financial products that you and I could barely grasp, but are needed by their clients.

    Please never forget that the national debt that you and I are all paying for is the result of poor economic management of the Labour government (basically mortgaging the country's future to pay for their social engineering projects and generally not getting value for money) and poor regulatory regime (another result of the Labour government by appointing the FSA to be the regulator, but not giving them the tools to regulate properly).

  • Comment number 96.

    I don't find 236k per head average too excessive.
    10k per month after tax? For really profitable work?
    It's a far cry from the regular lottery jackpots they used to get.
    But there are no doubt some trading superstars who will be rewarded with seven figures.
    Keeping the superstars interested is the big difficulty for HMG and the banks, against a backdrop of public frustration.
    236k before tax for excellent work.....O.K.
    2.36 million before tax, just for getting on the 8.10 to Fenchurch St.....very wrong.

  • Comment number 97.

    Robert. I like reading your blog and I really enjoy the comments posted by your other readers/contributors.

    The thing I'd like to observe about this blog and about other blogs in the past is just how quickly the thread gets off topic and at what point the traditional Tory/Labour battlelines are drawn.

    What I'd like to comment on here is the seeming assumption on the part of most of the writers that the particular banks under discussion are benign institutions there for the good of all - they're not!

    These banks are commercial operations and the bankers therein are there, first and foremost, to make money for themselves. If an employee, banker or otherwise, has performed an agreed task and a bonus is payable, so be it and well done them. I wish it was me! There is little point in complaining about these arrangements years after all the agreements were made!

    If this whole banking situation is to be managed for everybodys benefit then there needs to be suitable independent regulation put in place to prevent the ridiculous losses/bailouts witnessed over the past couple of years. If this cannot be done (or even if it can) a truly benign state-run mutual bank should be the viable alternative to a commercial set up.

  • Comment number 98.

    I am fed up with the abuse being thrown at me on a daily basis by the public. I work for a high street bank and this particular bank did not take money from the bail out, but due to the media and the moral panic raised by then we are all tarred with the same brush.

    I do not work in investments but on street level and people obviously feel they have the right to be downright rude to my face and accuse me of getting pay rises and bonusses.

    I personally got a 2.9% pay rise this year. Now that is not even a rise when inflation is currently 4%. Our bonusses are becoming less and less and I am now struggling just to make ends meet from a poor basic.

    So please I understand your frustration as at the end of the day, I too have to use the banking system but I am not prepared to be abused the way the I am just because of who I work for.

  • Comment number 99.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 100.

    Can I just make it clear to all bank tellers, advisors, managers, back-office personell that, no, you may be bank employees but you are not bankers. And the "real" bankers would be mortified at the thought that you would consider yourself as such. So there is no need to be so thin-skinned at "banker bashing" as most reasonable people understand that it was the bankers at the top who broke the system and made off with all the cash.

 

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